What is the Clayton Antitrust Act?
The Clayton Antitrust Act is a legislative act that was passed in the year 1914 by Alabama Senator Henry De Lamar Clayton. The passing of the Clayton Antitrust Act was considered to be prompted by a variety of catalysts, which included the monopolization of commercial markets, unethical commercial-pricing strategies, consumer protection, employee protection, and the presumed vagueness within the Sherman Antitrust Act of 1890 – considered to be the precursor to the Clayton Antitrust Act.
In contrast to the Sherman Antitrust Act, which primarily addressed both the formation and regulation of trusts, the Clayton Antitrust Act primarily concerned itself with market strategies, commercial pricing ethics, and the protection of the citizens of the United States from predatory and exploitative measures undertaken by businesses.
Clayton Antitrust Act vs. Sherman Antitrust Act
As previously stated, the Sherman Antitrust Act is considered to be the foremost piece of legislature enacted in order to establish regulatory measures with regard to the commercial operation of business and commerce within the United States. The passing of the Clayton Antitrust Act was undertaken not only to expand upon statutes expressed by the Sherman Antitrust Act, but also specify market activity existing outside of the strict formation of trusts:
Sherman Antitrust Act
The Sherman Antitrust Act was passed in direct to response to the activity of the Standard Oil Company, which was an oil conglomerate owned and operated by John D. Rockefeller.
Standard Oil undertook a commercial endeavor that enacted a market strategy consisting of the mass purchase of competing oil companies – an act believed to allow Standard Oil to assume agency over not only the supply, but of the pricing structure within the oil industry. As these mass purchases continued, Standard Oil began to lower its prices, which resulted in the insolvency of competing oil companies who could compete neither with Standard Oil’s pricing, not their agency of the oil market.
Clayton Antitrust Act
Although the legality surrounding the establishment of trusts had been formulated within the Sherman Antitrust Act, peripheral commercial and business activities – including mergers acquisitions, pricing structures, labor unions, and unconstitutional commercial partnerships involving distribution – had not yet been addressed within a legal forum; the establishment of the Clayton Antitrust Act served as a definitive legal guide demonstrating legal procedure addressing circumstances believed to be absent within the Sherman Antitrust Act:
Price Discrimination, as defined within the Clayton Antitrust Act, is considered to be the unfair and biased pricing structure with regard to separate retailers purchasing an identical product; upon disallowing a uniform purchase price, unfair advantages may be allowed to privileged buyers
Price Fixing, as described by the Clayton Antitrust Act, is the conspiratorial activity undertaken by two or more entities within a single industry, which allows them to retain exclusivity within that industry – this can include 2 retailers elevating their prices in tandem in order to exploit the lack of availability on the commercial market
The Clayton Antitrust Act allowed for the formation of labor unions to take place without the classification of a monopoly or trust; this allowed for the added protection of the rights implicit within the American labor force